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Senate Committee Approves Data Breach Bills Despite Heavy Opposition

While the Senate Judiciary Committee approved three data breach and privacy bills, it's still unclear whether a federal data breach notification law will pass this year.

The Senate Judiciary Committee approved three data security and privacy bills over strong objections from Republican members last week. The opposition may complicate efforts to pass comprehensive cyber-security legislation this year, observers said.

Committee members voted along party lines, 10 to 8, on Sept. 22 to approve the bills introduced by Sens. Dianne Feinstein (D-Calif.), Richard Blumenthal (D-Conn) and Chairman Patrick Leahy (D-Vt). These bills, and any other cyber-security bills that come out of other committees, such as the Senate Commerce Committee, will be consolidated into a single bill before being presented to the full Senate for debate and vote.

The Senate Commerce Committee is still working on getting Republican support for its data breach bill, introduced by Chairman Jay Rockefeller (D-W.Va).

"Congress has considered data breach legislation several times before, so the chances that any of the current bills will be enacted are unclear," wrote Harley Geiger, policy counsel at the non-profit public interest organization Center for Democracy and Technology. Cyber-security legislation faces "significant hurdles to enactment," he noted.

Further reading

These bills as approved by the Judiciary Committee would require firms to safeguard personal data collected from consumers and establish a national data breach notification law. The federal law would override the patchwork of state laws that organizations currently have to follow in the case of a data breach. However, if the state or local laws have state-specific information about victim protection and assistance programs, those requirements will remain intact.

Businesses that maintain personally identifiable information on 10,000 or more Americans must develop a personal data privacy and security program to regularly assess, manage and control risks, train employees, test regularly for vulnerabilities, require outsourcing partners overseas to secure the data, and periodically assess the program's effectiveness. Victims must be notified of a breach within 60 days by telephone or e-mail unless the organization could prove the breach did not cause much harm or if disclosure it would threaten a criminal investigation. Businesses must also post a media notice and alert credit reporting agencies if the breach involves 5,000 or more individuals.

Sen. Chuck Grassley (R-Iowa) warned that the bills could result in "over-notification" that would desensitize consumers to the dangers of identity theft. The bills also would be a burden on small businesses, according to Grassley.

"Under this bill, we may end up with more burdensome regulations, small businesses forced into bankruptcy, jobs lost and consumers still going unprotected because the over-notifications will be ignored," Grassley said in a statement referencing Feinstein's bill.

Leahy's Personal Data Privacy and Security Act would establish a national standard for companies to follow when reporting data breaches and require businesses to implement data privacy and security programs to prevent them in the first place. The bill also includes criminal penalties. Leahy had introduced similar measures in 2005, 2007 and 2009 which had gone through the Judiciary Committee but failed to get enough votes in the full Senate to become law.

"The problems of data breach and lax information security are only growing more prevalent, so perhaps this time is different," Geiger said.

Leahy noted that in past years, privacy legislation received bipartisan support. If the Republicans continue to object to the bills, it's possible the cyber-security bill will fail in the Senate. Grassley said more changes needed to be made.

Some Republican amendments were approved, such as a mandatory three-year prison sentence for those convicted of fraud in the Leahy bill. The bill was also amended to clarify that it was not illegal under the Computer Fraud and Abuse Act to violate agreements like Website terms of service or acceptable use policies.

The Electronic Frontier Foundation praised the amendment, noting that it will protect "ordinary computer users who happen to breach terms of use." CDT's Geiger noted that it would focus the CFAA on the identity thieves and hackers it was designed to target.

In the House, a task force of 12 Republicans led by Rep. William Thornberry (R-Texas) is expected to send its cyber-security recommendations to House Speaker John Boehner and Majority Leader Eric Cantor on Oct. 3.